Africa beckons as the next pot of gold for the cellphone telecoms industry

Sector players have seen growth especially in mobile Internet and banking services, as people use cellphone technology for lack of landlines or cable Internet.

“Africa is the last market to emerge. China’s emerged, India’s emerged. So where else outside Africa needs emerging? The growth opportunity is right here,” said Nicolas Regisford, co-founder of Mi-Fone, a South African company that specializes in producing low-cost handsets.

Mobile subscribers in Africa have increased by 20 percent annually over the past five years and will reach more than 735 million by the end of next year, a study by global mobile operators association GSMA found last month.

“Africa is now the world’s second-largest mobile market by connections after Asia, and the fastest growing mobile market in the world,” according to the GSMA Africa Mobile Observatory 2011 report.

Industry players are equally excited over the commercial prospects posed by the continent’s 1 billion people.

ENTRY-LEVEL PHONES

“Samsung is expecting revenue within Africa to amount US$15 billion, with the SADC [Southern African Development Community] region contributing about 25 percent of that figure, by 2015,” said Gavin Clare, the company’s representative in Zimbabwe.

This philosophy also drives Mi-Fone, which eyes the immense market of consumers seeking entry-level phones.

“The African person wants a mobile device which will be doing mobile payments and accessing the world wide Web. Right now, a lot of people cannot afford the smartphones that are flooding the market,” Regisford said.

Ironically, this lack of traditional infrastructure, telecom and landline services, Internet penetration and broadband access, and banking services drives this growth in Africa, according to mobile systems expert Tomi Ahonen.

“As it happens, the global Internet industry believes that the future of Internet is mobile. The global telecom industry believes that the future of the telecom industry is mobile and the global money industry is starting to believe that the future of money is mobile,” Ahonen said.

One case in point is Kenya, already the world’s largest mobile financial services user in relation to its GDP. Almost 18 million Kenyans use their cellphones as a bank account to deposit or transfer money — contributing 8 percent of the GDP and several other African countries are following suit.

TEXTS AND CALLS

The “maturity of the market,” as financiers call it, is another asset. Applications dominate the mobile world in Europe and the US, but earn relatively little. On the other hand, the mobile business in Africa keeps earning through more conventional services like text messages and voice calls.

“The business model around the basic services on mobile are much more realistic and robust,” Ahonen said at a workshop in Johannesburg last month.

This cellphone explosion in Africa contributes as much as US$56 billion to the region’s economy, or 3.5 percent of its GDP, but the indirect effect on growth is perhaps even higher.

“Local development of telecommunication has a direct impact on GDP. This is a professional tool. Many handcrafters or retailers dramatically need to be connected to the world to make business,” Regisford said.